Bitcoin price target rises to $78K after Chinese stimulus package.
Bitcoin (BTC) looks poised to receive a major $78,000 charge in the coming weeks due to price chart technicals and China's recent economic stimulus.
Central Bank Monetary Increases Demand for Bitcoin: Analyst
On September 24, the People's Bank of China (PBOC) announced that it would cut the reserve requirement ratio (RRR) by 50 basis points, injecting about $140 billion in liquidity into the financial system.
The PBOC has cut borrowing costs and eased property-buying rules to boost the struggling real estate market and the broader economy.
Jamie Coutts, chief crypto analyst at investment management firm Real Vision, argues that China's latest stimulus package is bullish for Bitcoin, suggesting that it will influence other central banks to follow suit.
“The bottom line for this cycle is global central bank liquidity. Sit back and watch other CBs fall online,” he said.
“In a credit-based fiat fractional reserve system, debasement is a feature, not a bug.”
BTC/USD vs Big Four Central Bank Balance Sheets. Source: Jamie Coates
The PBOC's latest stimulus package announcements preceded huge rallies in risky assets like Bitcoin. For example, the PBOC injected $367.7 billion in October 2023 and $140 billion in January 2024, reducing the RRR by 50 basis points.
Following the announcements of the stimulus package, the price of Bitcoin increased by more than 100%.
BTC/USD Daily Price Chart Foot Chinese Trigger Packs. Source: TradingView
Interestingly, due to China's crypto mining ban in 2021, the direct relationship between Chinese liquidity and Bitcoin is less clear.
However, as Coates points out, Bitcoin's performance is closely tied to global liquidity conditions, and China's easing measures could lead to broader changes in risk appetite.
Technical Analysis: Bull Flag Broken Eyes $78K
Adding to the bullish outlook is the formation of a bullish flag pattern on Bitcoin's long-term chart.
A bull flag pattern is formed when the price consolidates in the territory of a descending channel after a strong reversal movement. As a rule, the pattern is resolved when the price breaks above the trend line and rises to the previous high.
Related: ‘History suggests it's time for Bitcoin to exit' – Rekt Capital
As of September 24, BTC price has been testing its flagging high trend line above $78,000—a new record high.
BTC/USD Daily Price Chart. Source: TradingView
Conversely, a retracement from the upper trendline can push the price down to the lower trendline, which corresponds to the 0.0 Fibonacci retracement trend around $5.
As Cointelegraph reports, BTC may need to rise above $80,000 to reach a new all-time high when adjusted for inflation.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
